The labor market is giving off mixed signals right now. Market watchers have become fixated on headlines reporting thousands of layoffs at some of the nation’s largest employers, and firms collectively report nearly 2 million fewer job openings than one year ago.
But most labor market data is still strong. At 3.7%, the unemployment rate is near an all-time low, and the economy continues to add jobs each month at a steady clip.
So what’s really going on in the labor market? For timely insight, we listened to the 1Q23 earnings calls of four of the largest recruiters in the nation. Here are the major takeaways:
1) Hiring slowed considerably in 1Q23, in line with a typical economic slowdown.
ManpowerGroup (April 20, 2023)
“After months of a remarkably strong US labor market, we are now seeing more companies across various industries recalibrating their workforces after a period of bullish hiring, shifting their focus towards more intentional hiring for specialist skills and in-demand roles, delaying hiring decisions, and reducing their demand for contingent workforce, in line with dynamics we have seen in past economic slowdowns.”
Robert Half International Inc. (April 26, 2023)
“Global labor markets remain tight, and clients continue to hire, albeit at a more measured pace. Many are more selective and have added steps to their hiring processes, which impacts their decision time frames and lengthens our sales cycle.”
ZipRecruiter (May 9, 2023)
“From conversations with our customers, we see employers paring back their hiring in response to the uncertain economic backdrop we now face…unlike anything we’ve seen in our 13 years of doing business.” (Note that ZipRecruiter was not in business during the GFC)
2) Hiring and staffing trends vary by sector.
ZipRecruiter (May 9, 2023)
“Technology, as you might imagine, does seem to be more impacted.”
ManpowerGroup (April 20, 2023)
“On the technology enterprise clients, that’s where there’s more cautious behavior in terms of demand.”
Robert Half International Inc. (April 26, 2023)
“Our more staff level or operational positions in both Finance and Accounting (F&A) and in technology were more challenged during the first quarter, and we would expect that to continue into the second.”
ZipRecruiter (May 9, 2023)
“Finance has not been particularly impacted yet, despite headlines about banks and other things.”
ManpowerGroup (April 20, 2023)
“As we looked across financial services, we’re seeing very strong trends, and that’s in both enterprise and convenience.”
ZipRecruiter (May 9, 2023)
“Healthcare is an example of an industry that continues to show less cyclicality and seems to be less impacted by the slowdown. On the flip side, travel and leisure still seems to be holding up reasonably well.”
3) The hiring outlook for 2023 remains solid as employers look to fill in-demand roles.
Insperity Inc. (April 26, 2023)
“We still have about a little over half of the client base that expect to have more employees in their organization as the year progresses, and it’s still a small number that expect less and a little bit bigger number than usual that expect to stay the same.”
ManpowerGroup (April 20, 2023)
“Looking into the second quarter, employers are still intent on hiring talent, and that’s why we feel that the environment is still solid, and the competitive environment is always competitive but rational at the same time.”
CONCLUSION: Hiring has noticeably slowed from last year’s frantic pace, but recruiting firms do not expect significant labor market weakening in 2023.
Despite layoffs in rate-sensitive sectors and muted hiring plans relative to one year ago, most industries and employers are still looking to staff up this year. We’re now baking modest year-over-year job growth into our outlook for 2023 and will continue to monitor the labor market for signs of softening as the year progresses.
